As the trials and tribulations of ailing retailer J.Crew continue to unfold, its latest development surely has the company — which will soon be led by someone other than CEO of 14 years Mickey Drexler — breathing a sigh of relief.
On Monday, J.Crew announced in a release that it's nearly completed an exchange offer that will result in a (much-needed) infusion of a lot of cash: $566.5 million, to be precise. The Benjamins come courtesy of an exchange offer with bondholders, launched earlier this month, through in payment-in-kind (PIK) notes, due May 2019. And the bondholders have bitten: 93.6 percent of the outstanding notes, or roughly $530.5 million of the agreed-upon $566.5 million, have already been exchanged. The remaining notes must be exchanged by July 10 for the deal to go through, and it appears likely that they will.
All this, of course, is excellent news and could not have come at a more opportune time for the company on the heels of a very rough few months. Earlier this month, the retailer revealed that Drexler will be stepping down from his post as soon as next month and will be replaced by West Elm President James Brett, who will be tasked with orchestrating J.Crew's turnaround. This announcement came after the news in April that the brand was set to cut 250 staff positions and shuffle executives to and from Madewell, and that Jenna Lyons, J.Crew's Creative Director, President and unofficial-official face, would also be leaving the company. But J.Crew seems intent to right its prolonged sales wrongs: Earlier this month, it reported that it had plans to close 20 stores and are considering additional options, like — gasp! — wholesale. Perhaps this half-a-billion dollars will help them get there.